The move comes against a backdrop of steadily deteriorating public security in the country as it approaches a crucial first round of elections set for January.

Those working on the changes said the proposed reallocation amounts to nearly one-fifth of the $18.4 billion Congress approved last November to rebuild Iraq. They said the shift would delay vital electricity, water and sewage projects -- all crucial to restoring Iraq's economy and building public support for the country's struggling interim government.

Instead, the money would go to an array of other programs, including $1.8 billion to strengthen the government's shaky security organizations and additional funds to soak up unemployment. In a country where idle men with little hope for work make easy recruits for a virulent insurgency, job creation is closely linked to improved security.

At another level, however, the move underscores the administration's assessment that substantial changes are necessary to control an insurgency that has grown in strength and sophistication despite U.S. military efforts to contain it. Officials at the State Department working on the reconstruction revisions said the shift in focus is part of a realization that funding even the most important projects makes little sense if conditions on the ground prevent their completion.

"The first priority for our effort right now has to be security," Secretary of State Colin Powell told reporters last week. "If a place is not safe to build a sewer system, you can't spend the money."

The revised spending plan calls for adding 45,000 new recruits to the national police force, raising 20 new battalions to the current 42-battalion Iraqi National Guard, and beefing up the force that patrols Iraq's long frontiers in an attempt to stem the flow of illegal traffic, including armed fighters crossing into Iraq from countries such as Iran and Syria.

Those familiar with the reallocation said new money is also proposed for two other security organizations -- a paramilitary force to deal with civil threats to public order and an elite unit to guard dignitaries in much the way the U.S. Secret Service protects leading members of the American government.

The shift of priorities, initially drawn up at the U.S. Embassy in Baghdad, is expected to be reviewed at a meeting this week in Washington of senior officials from several government agencies before going to Capitol Hill for final approval. There is no sign of major opposition to the changes and those familiar with the issue predicted that Congress probably will ratify the revised plan by the end of this month.

"There will be a lot of questions asked and there may be a hearing, but in general people want to be receptive to this," said a congressional aide who requested anonymity. "There's a recognition that the realities (in Iraq) are much different than they were last fall" when Congress originally approved the budget.